Home Sellers: Be Prepared to Evaluate Multiple Offers
Image: Bill Chizek / Adobestock
If you are selling your home in today’s hot real estate market, you will probably encounter every home seller’s dream: multiple purchase offers. Typically, multiple offers result in a bidding war as competing buyers bid up the price of the home. This is great news for a home seller, but there are other things to consider besides the highest price when looking at multiple offers.
The Highest Offer Isn’t Always the Best Offer
A higher price can mean it is tougher for a buyer to qualify for a mortgage or come up with enough money for a down payment. If the asking price is already at the top of a buyer’s budget and has gone even higher, their lender might get anxious. Always consider the buyer’s qualifications and whose financing is most likely to go through.
Your Home Might Not Appraise for a Higher Price
The appraisal is something to keep in mind when you are entertaining offers above the asking price. Chances are that your house was listed near the top end of its market value when you put it up for sale. Multiple offers can drive up the home price and exceed the market value of the home. If this occurs, the mortgage lender will require the borrower to bring cash to the table to make up the difference between the loan amount and the proposed purchase price.
Every home offer comes with contingencies that are designed to financially protect the buyer. Appraisal contingencies, financing contingencies, and home inspection contingencies all give buyers the option to back out of a contract if an issue arises. The fewer the number of contingencies, the better it usually is for the seller because there are fewer reasons a buyer can get out of the contract.
Everything Is Negotiable
A home seller with multiple offers has leverage to dictate the terms of the sale. If each purchase price offer is similar, take a hard look at other details in the contract. Does one buyer want you to throw in your children’s outdoor play set or the pool table in your rec room? A buyer who has asked for certain concessions might not be as attractive as one who doesn’t have any concessions, even if their purchase price isn’t quite as high.
Consider any timing demands competing bidders are making. Is one of them pushing for a quick closing when you need time to stay in the home? Does one want extra time before moving in because they need to sell their own home first? Any and every buyer demand is negotiable, and the home seller has the upper hand in a situation with multiple offers.